Rate Hike to Help Pay for Sewage Upgrade : *Utility fees: City owes $63 million over next 10 years to cover its share of improvements at Hyperion plant.

In the mid-’80s, Santa Monica made a commitment to clean up Santa Monica Bay by paying for its share of improvements to the Hyperion sewage treatment plant in El Segundo.

The bill is now due, and it’s a whopper--$63 million over the next 10 years. This week, the City Council took a major step toward paying the cost of improved waste-water treatment, voting 6 to 0 to substantially raise the rates charged to residents and businesses in the city. The rate increase will go into effect Nov. 1 and will be reflected in the December bills. Council members warned of possible additional increases in future years.

The increase will cost the average single family homeowner $60 a year, a seven-unit apartment building $258 a year and a small office building $412 a year.

Businesses whose waste water contains substances that are difficult to treat--such as kitchen grease and certain oil-based chemicals that auto repair shops may legally dispose of in sewers--will be hit the hardest. In some cases, their fees will more than double.

For instance, the Sheraton Miramar hotel’s fees will go up 159.7%, mostly because of a new surcharge for discharging kitchen grease into the sewer system, said Stan Scholl, director of general services for Santa Monica.

The increased fees are part of a complete overhaul of the rate structure that will, for the first time, include a monthly service charge similar to that levied by the telephone company and other utilities.

The monthly fee is based on the size of the meter and the character of the waste, in accordance with the federal Clean Water Act, which requires that sewer users pay for the amount and strength of waste water they contribute, Scholl said.

Under the old system, sewage fees have simply been linked directly to the amount of water used. The new structure, in which water consumption is only one variable used in calculating bills, may result in modest reductions for some large water users, such as hospitals, coin laundries and car washes.

The City Council also voted to issue $33 million in municipal bonds to help defray costs for upgrading Hyperion, the giant treatment plant owned by the city of Los Angeles. A second bond issue is expected for 1994.

Santa Monica contracts with Los Angeles to dispose of its waste, and is liable under that agreement to pay for its share of a $3.8-billion overhaul of the plant to keep it from dumping sludge into the ocean. The plant improvements were agreed upon in a 1984 out-of-court settlement between Los Angeles and the federal Environmental Protection Agency.

Scholl said it will take eight to 10 years for all the improvements to be completed.

In addition to paying $63 million as its share of the Hyperion expenses, Santa Monica anticipates costs of up to $37 million to maintain and replace local sewer lines and make up for a loss of revenue due to the city’s successful water conservation efforts. Because the sewer fees have been tied to water use under the old rate structure, conservation efforts have meant less money has been coming in for waste-water treatment at a time when costs are rising.

Santa Monica now sends 9 million gallons of waste water down its drains every day, down from a high of 13 million gallons in 1986, Scholl said. It was 12 million gallons in 1990.

“What (we’re) paying for is to improve the quality of the ocean . . . a wonderful advantage to our community,” City Councilman Dennis Zane said. He described the higher charges as “a fee we should willingly and enthusiastically pay.”

A final vote on the ordinance is scheduled for next week. Councilman Herb Katz was absent during Tuesday’s vote.

Councilman Robert Holbrook noted that curbs on development may also translate into future rate increases.

“Lack of development is expensive to the taxpayers,” Holbrook said.

Only two people testified against the increase. Council members expressed concern that many people who live or do business in the city were unaware of the plans for a rate increase.

The city will soon mail out notices explaining the hikes. City officials added that businesses such as dry cleaners, auto repair shops and photo labs will be able to appeal the increases if they can show they are pre-treating or not disposing of their byproducts in the city sewer system.

Residents or businesses may also opt for a smaller meter if they can get by with it, a change that will save money since meter size is an element of the rate formula.

Because Santa Monica is under contract with Los Angeles to treat its waste water, its choices are limited, Scholl and several council members said. Of the other municipalities tied into Hyperion, all but two have gone along with the capital improvement costs, Scholl said. One of the cities, El Segundo, has refused and will go to court to decide the matter. Another is building its own sewage treatment plant.

City Manager John Jalili said he did not think there was any point in Santa Monica’s considering its own plant, because it would be difficult to find an appropriate site in such a built-up city.

Mayor Judy Abdo agreed.

“Do you want it in your back yard?” she asked.